The Leading Indicators: A Short History of the Numbers That Rule Our World by Zachary Karabell

Author:Zachary Karabell
Language: eng
Format: mobi, epub
Publisher: Simon & Schuster
Published: 2014-02-10T18:30:00+00:00

8

WHERE’S WALDO?

And now we return to the question posed at the beginning of the book: What if you were told that one of the core assumptions that we make about our economic life is wrong? What if that assumption has colored one of the most important bilateral relationships in the world? What if you were told that there is no trade deficit between the United States and China?

“Every once in a while a revolutionary product comes along that changes everything. It’s very fortunate if you can work on just one of these in your career . . . Apple’s been very fortunate in that it’s introduced a few of these.” With these humble words, Steve Jobs launched the Apple iPhone to a packed and rapt audience in January 2007. The sleek device did not just catch the imagination: its sales soared to more than ten million in 2008, twenty million in 2009, and nearly forty million in 2010. Within a few short years, the iPhone became ubiquitous, a symbol of cool and cache, not just a phone but a totem of the next technology revolution and a symbol of American innovation and success in the midst of a devastating financial crisis that led many to doubt the viability of the American system. There was just one small problem: the phone was made in China.

On the eve of the 2012 elections in the United States, Americans appeared deeply divided on many major issues. Consensus about health care and how it should be paid for, about debt and the size of deficits, about immigration and its reforms (or lack thereof)—well, good luck if you could find any. Supporters of Mitt Romney kept little company with supporters of Barack Obama, to the point that Republicans and Democrats relied on separate but not very equal polls.

Yet there was at least one thing that most Americans agreed on: China. More specifically, most Americans agreed that China was a threat to the United States, that its currency had been systematically undervalued, and that, as a result, American jobs had been lost and manufacturing imperiled. Throughout his campaign, Mitt Romney vowed that one of his first acts as president would be to label China a currency manipulator, and the Obama administration was only slightly less adamant about the dangers posed. And the primary reason for these concerns was the large amount of US debt held by the Chinese government (in excess of $1 trillion) and the large trade deficit that had been growing every year to reach nearly $300 billion in 2012 and climbing even higher in 2013.1

And the iPhone, that icon of innovation, the child of that most American of all innovators and entrepreneurs, Steve Jobs, was adding to that deficit. Every time a new phone rolled off the factory floors of Foxconn Technology (Apple’s main contractor in China) in Shenzhen and was shipped to the United States to be unloaded by massive cranes at the Port of Long Beach, it showed up not as a bright spot for America, not as a plus for the ailing US economy, but as an import from China.

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